Despite a mountain of potential material that would make any legal eagle quake and quiver, we sit here this morning with a serving of a trial of a mid-level Goldman Sachs employee, Fabrice Tourre, (aka Fabulous Fab) and are supposed to be encouraged that Wall Street is being cleaned up.

I am not impressed.

Beyond that, though, if I am an SEC lawyer assigned to this case, I would feel very much boxed into a corner, in a no-win position.

Let’s think about this case for a second. Supposedly, the Fabulous Fab made material misrepresentations to clients in the marketing of the now highly publicized CDO transaction known as Abacus.

If the SEC wins the case, I would think the general public would wonder why it is that a mid-level employee faces the music, but his superiors are leisurely sipping cocktails.

If the SEC were to lose the case, I would think the general public would feel that Wall Street’s cops might not be capable of finding anybody at fault within Wall Street’s major banks.

When I think of Fabrice Tourre, I am reminded of one Joe Jett who gamed the back office systems at Kidder Peabody twenty years or so ago. While Joe faced the music, his superiors who likely were all too aware — or should have been — as to what Joe was doing walked out the doors with their do-re-mi and careers largely intact.

Not unlike a wide array of other highly organized illicit activities, what we have with Fabrice Tourre is nothing more than a fall guy. As such, I believe the American system of juris prudence should be embarrassed that this is all it can deliver to a public that now knows all too well that Wall Street can and does purchase its own justice in the form of a steady stream of campaign contributions and lobbying dollars sent annually to Washington.

Navigate accordingly.

Larry Doyle

For those reading this via a syndicated outlet or receiving it via e-mail or another delivery, please visit my blog and comment on this piece of ‘sense on cents‘.

I have no business interest with any entity referenced in this commentary. The opinions expressed are my own. I am a proponent of real transparency within our markets so that investor confidence and investor protection can be achieved.

This entry was posted
on Tuesday, July 16th, 2013 at 8:46 AM and is filed under General, Goldman Sachs.
You can follow any responses to this entry through the RSS 2.0 feed.
You can skip to the end and leave a response. Pinging is currently not allowed.

“Wall Street firms should serve as an important first line of defense for investors, and the survey identified fundamental ethical weaknesses throughout the financial services industry. Consider these findings: 26% of financial services professionals believe the compensation plan or bonus system at their company incentivizes employees to compromise ethical standards or violate the law; 24% fear retaliation if they were to report wrongdoing in the workplace; 17% felt that leaders in their firm were likely to look the other way if they suspected a top performer had engaged in insider trading; and 15% doubted these leaders would report actual insider trading violations to law enforcement authorities if a top performer was involved.”

Matt

This is NOT a case of a rogue trader somehow bypassing Goldman’s risk controls a la the “London Whale” (although the risk parameters at JP Morgan seemed to change on a daily basis).

These products were a Goldman product signed off on by the firm. Anyone who thinks these CDO’s were produced out of thin air without anyone in senior management involved is completely delusional.